In this study, phosphorus-containing Fe-5 wt.% Si silicon steel sheet was prepared by powder loose sintering followed by hot rolling. Defect-free sheet with high P content was achieved. The study found that P effects on sintering promotion and processing deterioration were significantly suppressed by the presence of Si in steel. Appropriate P content would significantly improve the mechanical and magnetic properties of the sample. Under a comprehensive consideration, P content of 0.3-0.5 wt.% was suitable for silicon steel. Compared with P-free silicon steel, with 0.3 wt.% P addition, the tensile strength of silicon steel increased from 521 MPa to 680 MPa. As to the magnetic performance, the sample with 0.5 wt.% P had B8 of 1370.5 mT, and W10/50 0f 1.16 W·kg −1 , while those for P-free sample were 1332.3 mT, and 1.46 W·kg −1 , respectively. FeP phase with special morphology would be precipitated in samples with P addition.